Bonzo is in business for himself making and selling Easter baskets.His daily cost for wicker is $100 and his daily revenue is $120.Bonzo quit his job at the Basket Weaving factory where he earned $15 a day,to enter the Easter basket business.Given this information,we know that his accounting profit

Question

Quizplus · Accepted Answer

Bonzo's accounting profit can be calculated by subtracting his daily cost from his daily revenue: $120 - $100 = $20. However, to calculate his economic profit, we must also take into account his opportunity cost, which is the income he could have earned if he had stayed at the Basket Weaving factory. Since he gave up $15 to start his own business, his economic profit is only $20 - $15 = $5. Therefore, the correct answer is C.

Bonzo Is in Business for Himself Making and Selling Easter